Water Services Economic Efficiency and Consumer Protection Bill

Members, the committee is resumed on the Water Services Economic Efficiency and Consumer Protection Bill. When we suspended the debate before the dinner break, we were considering Part 1. The question is that Part 1 stands part.

Thank you, Madam Chair—that was very lucky. I just have a very quick question in terms of Part 1 at clause 3(2)—well, clause 3(1), (2), and (3), I guess. It’s talking about “This Act provides for—”, and this is the preliminary provisions, where it talks about “the regulation of the price and quality of water infrastructure services, as set out in Part 2;”. But the question I have is that in terms of the way that this is actually structured, when the regulatory impact statement actually states that the prices that consumers will pay will potentially be higher, how does the Minister feel that the price regulation in terms of providing quality water infrastructure services are actually looking after consumers when the prices are actually going to be quite high?

I wonder if the member might just refer me in Part 1 to the exact provision she’s referring to? I’m just struggling to see where in Part 1 that matter is raised.

Thanks, Madam Chair. I know we’ve just had a break, so I did ask two questions before the dinner break of the Minister. One is: what were the other models that were considered? Because, as I said prior to the dinner break, where we’ve ended up is with a very heavy-handed regulation environment for these water companies, whether they’re four or 10, or whatever.

Also, there is this definition of “competition” which is included in clause 7 in Part 1, on page 13. So what is the nature of that competition? We know that these entities are not going to compete across borders and we know that they’re not going to compete for consumers. So I’m quite interested to hear at a higher level why the Minister thinks, with that framework around customers and competition in general, that such a heavy-handed approach would be required, because if you look internationally, this is right up there in terms of a comprehensive, overarching sort of type of arrangement to regulate this small number of entities.

I note for the member that there are two documents. One is Supplementary Order Paper 417, which has been tabled, which contains all the provisions, and it would just be useful, if there’s any reference to that, that we know whether we’re referring to the bill as it was reported back or to the Supplementary Order Paper.

In terms of “competition”, “workable or effective competition” is well recognised as a definition of competition throughout the Commerce Act and elsewhere. It is understood as an effective definition of “competition” throughout the law generally.

In terms of the wider-ranging issues, I don’t see any of that referred to in Part 1. But if there’s anything else in respect of Part 1, I’m happy to respond.

Thank you, Madam Chair, and thank you, Minister, for coming along. I’m trying to ascertain the role of the Commerce Commission, as you will appreciate, in its normal role of adjudicating how markets work in making sure that they are working in a safe and salient manner, and are abiding by all the things inside the boundaries of the law—now, obviously, the role of the Commerce Commission in this capacity of adjudicating the financial wellbeing for consumers of all things to do with the water services entities legislation. What will it look like in terms of the Commerce Commission, in its role, giving effect to Treaty principles? If you could please answer that. What are those Treaty principles by way of definition, if they in fact have been laid out, and how will the Commerce Commission speak to those when it comes to the very salient issue of the management, the oversight—the financial management and oversight—of infrastructure assets and outcomes?

I thank the member for his question on Part 1. The issue of how the Treaty principles and Treaty settlements are dealt with was very carefully considered. Obviously, the water services entities themselves have the primary obligation and the primary relationship with iwi, and it was determined that economic regulation and consumer protection provisions for the water services sector must be responsive to the Treaty and to Te Mana o te Wai. The commission is required to take into account the entities’ Treaty-related obligations. So it’s a secondary obligation on the commission itself, but that supports coherency across the wider water services reforms and, of course, recognises the Treaty principle that water is a taonga for Māori.

So the entities’ obligations may warrant higher levels of investment activity. That’s a matter for them in consultation with iwi and through their own structures. It must be considered by the economic regulator when regulating the entities, including when setting price-quality paths, and their other roles as well. It’s entirely appropriate for the Commerce Commission to do so. It ensures that the economic regulation of the consumer protection regime is designed in a way that recognises Te Tiriti and the importance of Te Mana o te Wai to these reforms. It is important that it doesn’t duplicate the roles across the wider regulatory framework. And I just note that the bill also makes it clear that the commission has to have the capacity, the understanding, and the knowledge of the relevant tikanga to discharge that role.

Thank you, Minister, for a very succinct answer, and I genuinely mean that. Could I add to the line of inquiry? Have the principles of Te Mana o te Wai been defined—yes or no—as you understand it to be so? And if not, and they are still in the process of being clearly defined, in the legislation as written how will the Commerce Commission run oversight in terms of outcomes if those principles are not clearly defined? I mean this with the greatest respect: Te Mana o te Wai statements are quite subjective in this capacity when it comes to the fiscal adjudication and functionality of all things to do with water services entities. If those definitions are ill defined or not clearly defined and subject to subjectivity, you might say, does not that run the risk of the very thing you seek to alleviate? That’s duplication.

I’d invite the member to read the Supplementary Order Paper which clarifies that Te Mana o te Wai is the meaning set out in the national planning framework made under section 34 of the Natural and Built Environment Act 2023.

With all due respect to the Minister, I’m still on the third attempt trying to get him to understand and provide a reason why we’ve ended up with such heavy-handed regulation. I noted, prior to dinner, the functions of the Commerce Commission under clause 4 and the definition of “competition” over the following pages. So what I’m trying to understand is why the Minister thought it is absolutely necessary to have such a heavy-handed approach, when we’ve, essentially, got a small number of entities that do not compete with one another. And what is the issue—how would he define “competition”? Why would that have driven the Labour Government to impose such a heavy-handed regulation? It’s all in the definitions there, so, hopefully, the Minister can answer the question this time.

Point of order, Madam Chair. I seek leave for all provisions to be taken as one.

Leave is sought for that purpose. Are there any objections? There are none.

Andrew Bayly: I’m waiting for the Minister, hopefully, to stand at some point. So—

CHAIRPERSON (Hon Jenny Salesa): One moment, please, Andrew Bayly. The question is that Parts 1 to 5, Schedules 1 and 2, and clauses 1 and 2 stand part.

Parts 1 to 5, Schedules 1 and 2, and clauses 1 and 2